…Passes N7.5billion supplementary budget to fund it
Lagos State Government has concluded plans to take over the Eti-Osa – Lekki-Epe expressway earlier concessioned to Lekki Concession Company (LCC) and bring it entirely under its control.
The Eti-Osa – Lekki-Epe expressway is a 49.36km currently with two toll plazas but with intention to increase it to three later.
This was made known during an emergency sitting held by members of the Lagos State House of Assembly to urgently attend to a supplementary budget of N7.5billion proposed by Governor Babatunde Fashola (SAN) to accelerate the transfer of ownership of the road to the state, which he said will leave the state with a wider policy options with regards to road infrastructure.
The lawmakers, who were on recess had to cut short their vacation to attend to the supplementary budget proposal by the governor to give it urgency it required.
In a letter to the House and read on the floor by the Clerk, Ganiyu Abiru, the governor said that it became necessary to further amend the Y2013 Budget due to unforeseen developments in terms of the State’s Internally Generated Revenue (IGR) performance and emerging financial commitments.
“The proposal for further amendment is largely predicated on the need to fund the acquisition of existing concession rights and toll revenue benefits held by the Lekki Concession Company (LCC), the concessionaire for the Eti-Osa-Lekki-Epe expressway. This will effectively accelerate the transfer of ownership of the road to the state, leaving the state with wider policy options with regards to that important road infrastructure.
“In
order to address these issues, we have proposed a two-prong approach, namely re-ordering some expenditure provisions and also direct supplementation of the Y2013 budget. These will entail an increase in the overall budget size by N7.5bn. This is against the background of a projected shortfall of N22.5bn in budgeted Internally Generated Revenue (IGR) which now needs to be covered by additional borrowings. We also need to restructure our borrowing plans as the N30bn World Bank DPO II will no longer materialize in 2013.
“In effect, we will need to issue bond totaling N87.5bn this year, instead of the N35bn originally envisaged in order to cover the shortfall in IGR and the delay in disbursement of DPO II, so as to be able to finance the acquisition of the concession rights and take control of the toll regime for the benefit of our citizens.”
The House therefore approved a revised budget of N507.105 billion for the year 2013, being an increment of N7.5 billion from earlier budget approved and signed into law in January 2, 2013.
The House Committee on Supply approved the budget proposal after an hour of having the trio of Commissioners of Budget and Economic Planning; Finance and Commission of Works and Infrastructure explain the rationale for the increment.
Commissioner for Budget and Economic Planning, Ben Akabueze, explained that the principal basis for the supplementation of 2013 budget was due to the decision to acquire the 100 per cent concession of the Eti-Osa – Lekki-Epe expressway and have it entirely under the control of the state government.
He noted that the current economic condition of the state is better than what it was about 10 years ago when it entered into the concessionaire of the N50 billion worth of expressway.
“As a people-focused government, we are honest and humble enough to look at the choices we have made and have now decided to buy-back the road.
“When we do, we will be able to determine the tolling rate, number of tolling points among others. The current concessionaire has in fact proposed another 20 per cent increase in current toll rate collected on the road. But with us taking over, we will decide that too,” Akabueze said.
His counterpart in the State’s Finance Ministry, Ayodele Gbeleyi, said the state government would be paying the sum of N15 billion as buyout fund; N6.8 billion to service existing debt obligations of the tolling company; and N3.5 billion for third party liability.
Gbeleyi also observed that the sum of N32 billion has so far been spent on the road, with State government paying N5 billion in 2008.
“The original concessionaire agreement is to last for 30 years, from November 2008 to November 2030. But with our proposal and our transaction, the Special Purpose Vehicle (SPV) will be maintained with government owning it 100 per cent,” Gbeleyi said.
